A Real Nowhere Market

This commentary originally appeared at 7:39 a.m. EST on Nov. 27 on Real Money Pro -- for access to all of legendary hedge fund manager Doug Kass's strategies and commentaries, click here.

Sometimes the markets are not out of whack.

Sometimes the markets are efficient and represent where prices should be.

Perhaps one of those times is now.

Following the strong price rise of the major indices last week, the S&P 500 closed on Monday at 1402 -- or within 1% of my fair market value calculation and where I expected the markets to close on Dec. 31, 2012.

The time to press on the long side has likely passed (that was a week ago); the time to press on the short side passed us months ago (in mid-October).

Fears of fiscal, economic, political, geopolitical and tax cliffs are still somewhat overblown, but fears of an earnings cliff are not overblown.

It is the tug of war between those cliffs that defines the current market equilibrium.

As I have previously written, though Mr. Market appears fairly priced, there are always pockets of overvaluation and undervaluation. That is why a balanced exposure is probably appropriate for now.

Accordingly, I am currently positioned market-neutral, with about 35% long and 35% short exposure, in a real nowhere market.

Summary

Markets are fairly priced now.

I expect the S&P 500's year-end close to be around 1415 (plus or minus).

This is not time to adopt a variant view nor is it time to have an outsized long or short exposure.

Leave the hyperbole (and extreme views) to the media, the perma-bulls and the perma-bears.

This is still a great time to trade, not a time (for now) to emphasize investing (unless your time frame is longer than most market participants.